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tv   Street Signs  CNBC  October 9, 2012 2:00pm-3:00pm EDT

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everyone follows. >> expectations are quite low. >> any beat may move the market higher. >> matt chess love. sue? >> that does it for us on "power lunch." thanks, simon for joining me. "street signs" begins right now. have a great afternoon, everybody. despite today's drop, the dow within shouting distance of all-time highs, we have hopium in housing and jobs are coming back. but wait. er in rioting in athens, china is in a slow down and the fiscal cliff is on the way, folks, "thelma & louise" style. we will tie that all together for what it means for your money. welcome and happy anniversary, america, because five years ago today, the s & p 500 peaked at 1565. our big run the last few years, we are only about 120 points, 8%
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away from the highs. one thing about us americans, mandy, we don't like to finish in second place. so, how do we bust through that last mile and climb to new all-time highs? or should we be worried that hit willing those unsustainable highs will bring us down again? how do we hit new highs on the s & p 500? >> we have a 1600 target on the s & p the end of the year, propel us easily through the new highs, a couple of factors out in the market a lot relate around uncertainty. you keyed on at the top of your show, the fiscal cliff. more reports coming out a deal might be had, might not necessarily be a long-term deal, the financial times reporting today that some republicans are starting to shift a little bit as far as their taxation demands. might alleviate pressure about a deal getting done that removes a
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lair of uncertainty in the marketplace and the market hates uncertainty, whether it's good news or bad news, we remove some of that uncertainty and definitely have a rally at hand. i certainly think that's going to be one over the big factors. the other big factors is clearly kicking offing with alcoa, earnings season. earnings are tell gaffed to be bad this year. the ft highlighted this will be one of the worst a sense since 2009. you know what, probably right. and investors are expecting that at this point in time. bad news, could be baked in at this point. inline numbers that could take us higher. you know what's going to be really interesting, we get a lot of the big financials on friday. projecting names like wells fargo, exposure to the mortgage space to be outperformers in this season. financials could lead us higher through earnings. >> the expectations for financials are extremely bullish, the double digits. dave in all of those catalysts, you never mentioned the happy go lucky central banks, this central bank, central banks
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around the world. peter schiff, do you think it will be central bank lick dwhatd will propel us to record levels? [ overlapping speakersliquidit[ that will propel us to record levels? [ overlapping speakers ] >> see how much purchasing power the dow has lost, the dow has to double to retain its purchasing power in terms of gold you are in dhaurg time period and think we are going to get more dollar debasement. as long as we are debasing our currency you it is going to look like the value of stocks is going up. >> i love you, peter but mom and pop aren't opening up their 401(k) envelope going we are up, but look at it price it had gold, we are down. no one is going to do that. >> my client does that at
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pacific capital. people need to be learned not to be fooled by government's sleight of hand. the >> the problem is that we are reaching record highs, the numbers look good. to brian's point about mom and dad not necessarily opening their 401(k)s but the mom and pops participating in this rally? dave lutz, isn't this one of the sad factors, keep on moving higher? so many people burned during the financial crisis, they are not taking advantage of it? >> mandy, you're absolutely right. ici reported last week even though the stock indices almost doubled since our lows back in '09, investors pulled about $140 billion out of mutual funds and etfs, a couple of stunning facts, all that money seems to be flowing toward fixed income. vanguard reported the first time in history, bond funds bigger than stock funds. if i had dell disclosed last month, the size of their bond and money market assets almost $850 billion.
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that's more -- [ overlapping speakers ] >> -- about bonds -- >> the market is going to do whoever has the most participants. you are absolutely right. >> peter? >> i agree the biggest losses in the bond market. the people who will lose the most, unfortunately, the people who think they are playing it safe. they are trying to protect their principle but losing sight of the purchasing power. the dollar is going to lose a lot of value, not just against real money, gold, but against other fee yap currencies. the more the federal reserve tries to interfere with this adjustment process, right now going through a change in our economy, actually having a ratcheting down of our standard of live williiliving. we have had cheap money, too much spending, too much consumption, too much borough, too much regulating, too much money printing and it has made america poorer and we will have to have an adjust n our standard of living to reflect all the damage the government has done. the longer government tries interfere with the correction, the worse it will be.
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>> i hear you, peter, but dave, listen to mandy's point, just get 5% more retail investors back in the stock market, what would happen? >> i'm going to tell you, you know what, we are going to see treasury yields in the ten year pop north of 18, probably 2% the end of the year a big rush to the exits, brian, as soon as a lot of these guys start pumping out bond funds, you know where they are running? right into equity funds, why we tend to think that is another reason looking at 1600 in thesome and p. >> rush for the exits. >> listen to what you are saying, peter and certainly don't want to stir fear about an apocalyptic feel neglect markets. from what you have been saying on the show, sounds like you are predicting some sovereign or currency crisis, like europe has been experiencing? >> where have you been? i have been predicting that for years, worse than europe, unfortunately. we are in worse shape collectively, the 50 united states and the federal government in worse shape than the 17 nations that share the euro currency. we have got a bigger problem that needs to be unwound.
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went investors run for the exits, the yields are going a lot higher than 2%. there's really no ceiling on how high rates are ultimately going to go the fed will try to slow it down by printing money you can mortgage money fed prints to buy bonds, the lower they will ultimately fall, destroying the value of the kur rehn sit bonds are denominated n. >> fair enough, peter, i know your answer to this question, dave, put it to you you this time next year, at 1565 on the s & p 500, yes or no? >> higher. absolutely higher, i think. continue to see money flowing out of the bond market into the equity market. whether it is euro crisis you fiscal cliff, taxation policies, i think that run cork the top on the market. we will have a nice run. >> not the economy growing, money supplied inflation. the market may be highary year from now but not because the economy is growing, despite the
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fact that -- [ overlapping speakers ] >> i'm not drinking what he is having. i tell you that. >> thanks, guys. so, in that five-year run, which company has had the best performing stock in that time, mandy? it is our history chart. it is not am. do you know who it is? >> i do. only because i read the show. >> oh, dang. all right. one firm says to buy netflix because of amazon. one firm says to dump netflix because of amazon. a complete farce? we will duke it out in the next half hour. first, is it finally time for the government to get out of housing or should it get in even deeper? we are firing up the debate. that's coming right up. [ male announcer ] how do you trade?
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despite all bad economic news around the world, currently up to 9234 israel is confirming that the israeli prime minister called for an early election within three months. meantime is housing hope on the ropes? toledo, ohio, based owns corning cutting its forecast this morning, blames weakness in its roofing business as well as composite unit.
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it says it is soft here in the state bus blames lower production in europe. so, something to watch. speaking of housing, ireland is taking a very big step to help bolster that country's homeowners. the government there saying it will likely pass a law forcing banks to reduce the amount owed on mortgages. are we in the same spot in joining us with the president of team investments, tanya macyo. and new face to cnbc, welcome the u.s. economiest at b and b par rag way. good to have you on the show. thank you very much. like to get to you, first of all, you do not believe in further u.s. government intervention in the housing market but do believe putting the onus on the banks. >> i absolutely do the taxpayers billed out the bank $14 trillion. the banks are sitting on $1.64 trillion of reserves. i think it's time that the banks taken responsibility and truly help the homeowners that should be helped. not every homeowner should you can helped. truly upside down and can't
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afford their home, better to short sale, get out, foreclose, doesn't matter, get out of that bad situation, but people that are in their homes, that principal reduction could truly help and not only will it help the homeowner, it will truly help economy and act like a stimulus package. >> yelena, do you believe as well it up to the banks and not the government? >> you know exin the united states, we clearly have a different situation. in ireland, housing prices are still 50% below the peak during -- before the financial crisis and they have to take some bold step really. here in the united states, we don't really need to do that. in the first half of this year, we have seen the fastest rate of appreciation since 2005 ands the housing market is already recovering, so i think the private sector should lead the way in the housing recovery and
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government needs to be involved only in certain cases and in certain areas of the country. >> tanya, two words to you, moral hazard. >> moral hazard very interesting. i think what it has done in this country, we had irresponsible home owners, or home buyers. we had irresponsible bankers. predatory lending act. all of that stuff happened. absolutely is a moral factor to all of this. what i do think is we bailed the banks out. the banks should help those people and it has to be case-by-case, that need it. but absolutely not the government. >> tanya, i hear you, i don't want anybody to lose their home but how do you pick winners? about about the people that struggled and did pay their mortgage? what about me? >> those are the people i truly believe we should help that are in a situation where their house is literally half and they are struggling to make that payment. here -- let me testimony what you principal reduction would do
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if it was done correctly. it would actually put $71 billion back into consumers' pocket it would creator of $1 million jobs and it would actually reduce every homeowner's mortgage payments by $6500 a year. if done correctly. i agree with you. it has to be people who made their mortgage payment, done everything correctly, not those who actually played the system and lived in their house for eight months two years, whatever it was, and foreclosed on it anyway. that i think is just a great pickup for an investor. >> we have been talking about what should the government do or not do for the housing market, what should the banks do or not do in the fed is in there keeping interest rates low, allowing a lot of people to be able to buy a house or get a mortgage that maybe wouldn't have been able to otherwise. isn't the fed already helping a lot? >> well, the fed is already helping a lot. we do have low mortgage rates. the housing is recovering, it might not be a traditional
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channel through more household information or increase deed manned for homeownership. rather it has been an increase deed manned for rentals. higher housing prices helped boost rental yields. it is really helping the housing market through this nontraditional channel investment, investment into rentals what is driving you the housing recovery right now. >> as i hear it choices, a hold kohl-hearted nation that will let others fail and suffer painfully or moral has zblarkd the banks and the fed will bail everybody out and some left on the sidelines, that's it, right? no middle ground that is going to make everybody happy here. >> this is a situation where we are seeing the opportunity to pick up these homes below market value, threaten.
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they are cash flowing for people t is absolutely the time to make money in real estate. she was correct. this is a portion we have a lot of rents, though people will turn around, mortgage rates are low and housing is coming back. >> what happens when those interest rates rise? already i have seen them in australia, it's dash a lot of people got with the rates were low's, a lot of he foreclosures and problems? what happens when the interest rates rise eventually, yelena? >> when the rates rise, you know exprobably the housing prices will be higher as well and, you know, the housing market will be on the -- on the road to a more stable and more sufficient recovery so those who can get a mortgage will sometime be able to get it. >> thank you for debate iing th.
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time for the big reveal. we have been asking if you can guess the best performing stock in the s & p 500 the past five years there's your drum roll the stock is not apple. it is william shatner's favorite company it is cue the trumpets. that stock is up 568% since the s & p hit its record high five years ago today, mandy. >> okay. well, ibm, meantime, is up about 75% since the dow's record high of five years ago today, by the way. it was also a tuesday five years ago. so is it still time to buy big blue? coverage on ibm was initiated
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with a buy. we have got you on to the case. why a buy after the run-up, jim? >> many levers to pull on. margins, eps, stock buy back, all help eps in this turbulent time the economy isn't strong. we think eps is higher for ibm, one of the few tech companies see earnings grow. >> i'm going to play the devil's advocate here and ask you what could undo your buy rating and throw one out here, i know that emerging markets have been a key driver of ibm's revenue, perhaps still r emerging markets are slowing down. got their own competitors out there. is this a big risk factor for you. >> one thing to keep in mind as these growing economies start to grow, such as the banking strucking, they are going to need to embrace high-end computing for high-volume transaction and data analytics.
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analysis how people are buying online and shipping. ibm fits that bill perfectly. we think people start to buy more things more and more online and transactions are done electronically rather than the bricks and mortar banks. >> byo bottle, we know byou, bring your own unicorn, you think byod, bring your own device is a big trend for ibm? >> you are starting to see it in early earn innings, five years ago, talked about this as the headwinds for research in motion, blackberry, really hurt the company. now as far as ibm goes, seeing people bringing their tablets, laptops to work. this has a lot more head winds for security and software. >> for a tech downs such as myself, ibm doesn't make the devices, how do they benefit? >> great question and really smart.
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here is the answer. in the software and in the middleware, to enable that to work on the system. so when you buy some online clothing or a gift for christmas or anniversary gift, ibm will allow the business analytics or transaction to be filled. >> see whether or not tries pryce tag at 250, we will get there or not. >> thank you very much. the inventor of the band-aid needs one, an analyst slamming johnson & johnson, is it time to bust the company up in the answer coming up in street talk. we all know exactly what we would eat for our last meal, right? so if you had to choose just one restaurant stop to own, which one would it be, cheesecake, wild wings, yum? one analyst gives us his pick. and guess what, it might actually surprise you. ♪
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we are indeed reunited and it does feel so good to have the band all back together, group hug, everybody. i'm mandy with our own peaches and herb ready for street talk. ready for some talking? >> you can talk, my friend. >> i will. >> and you can't? got some big talkers here.
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edwards life sciences, today it is being crushed. >> if you talk about big talkers, this thing is screaming pain, as a matter of fact. down almost 20%. cut the outlook by 30 million in sales. sales of heart valves hurt by the eurozone and slower u.s. growth. think heart sales would go up given what is going on in the eurozone. what is troubling herb, in your wheel house, as late as july 24th, guided to a certain number, now just a couple months later, guiding down, clearly had almost no visibility. >> this is transcatheter, the transcatheter approach to the heart valve, put it in without busting you open. that makes it more difficult to sort of look at because it is such an important product. there is also competition on the horizon. there's -- i know people actually coming in, buying at this level, they feel they are willing to take that falling knife because they believe down the road there are some analysts who believe this thing is just a blip notice history. >> my father had a new heart valve put in and choice of
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mechanical, goes click, click, click when you are lying awake at night or a pig or a cow. which would you choose? >> depends on your able. might choose the pig or the cow if you are older like me, probably picked pig or cow. roofrnlts shack, meantime, is on a rare upgrade. >> very rare. bank of america, merrill lynch, upgrading radioshack to a buy from an underperform. say all the bad news pretty much priced them at the stock. they know they have got $1 billion in liquidity. think the management will be key to operational performance. no offense, but duh. >> don't forget what else he said in the report. >> raised the target to 250. a 15 cent upside call? >> he said not for the feint of heart. >> yeah. put that in there. >> and the company behind ann taylor and loft brands.
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>> not going to slam ann. the stock up 44% year-to-date. down today. morgan stanley downgrading from overweight. insider may think differently, share purchase 3702 recently. one insider is buying as there is a downgrade u >> going to break in. kate kelly with breaking news that does impact the banks. >> the federal reserve board leased its final rules on the so-called stress tests required for banks as part of the dodd frank act how banks would hold up under market conditions like a stock market rout or credit crisis were conducted at the 19 biggest banks this fall with results to be published in march. the banks will submit to two test, one the fed supervises and ones they oversees for themselves them an exercise some officials call the war games will be unveiled in november. smaller banks will be submitting
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to these tests a year from now, give or take. >> thanks very much for the breaking news, kate kelly, slight downside buys for the kbw. the meantime, took street talk. another stock on our radar, one very close to herb's heart, green mountain coffee, tit is currently up by 1.6. they have a deal with dr. pepper? >> capsules that will help you make dr. pepper and snapple. i think this is grass wering at strauss. the growth story i continue to say is over. they can put in whatever they want, brew some tea and pour it over eyes. the dr. pepper, i don't know the snapple, no. i'm just -- >> not buying this one? stock's down -- >> they are trying to -- they are trying to -- >> grappling. >> they are trying to ignite sales of this new brewer they have because patents came off the older brewers. i can't see the future, i would say not getting me excited. >> i guess the stock is kind of showing that as well.
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>> a big market. snaple is a widely bought product here. you can't even get excited about the deal. the stock has done terribly this year. it is not bob's society da company, major company selling hundreds of product to us the billions of "street signs" viewers. >> billions. >> my guess, short sellers out there adding. >> we will see in spring of -- >> getting warmed up for our netflix fight later. meantime, j and j, johnson & johnson, is one stock today that is down 1 1/2%. >> yeah. listen. johnson & johnson, obviously dow component, huge company. not often you see company like goldman downgrading a dow component to a sell, right? the analysts saying that the company lacks a transformational pipeline opportunity here. j and j, inventor of the
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band-aid, owned by millions of widows and orphans out there, card safe stock a rare downgrade. >> a number of analysts who have this thing at hold. look where the stock's come from. what the analysts effectively said, he met with management, he he wanted to hear them talk about a breakup. he wanted to see -- that's what he was looking for. without a breakup, doesn't think they can do it a gutsy call to come out and pull putt a sell on it at this point. >> analysts take heat, if you are goldman, might be investment banking revenue for you on another side of this here you -- >> slamming it. >> here you put the sell rating on. >> going to get our grub onit a food stock food fight. about to find out what the single best restaurant stock to own just might be. we will also hit the drive thru to see which fast food chain can claim the title of truly being the fastest. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell
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back. then get ready. alcoa set to report earnings after the bell. well, what is the fastest fast food chain in america? the answer here is wendy's. the qsr drive thru says it is the fastest, 129.75seconds, meaning it takes that long to wait in line to place an order and to drive away. coming this dead last, down here, burger king, at 201.33 seconds. by the way, the survey ranked each chain on service time, on order accuracy, very important, obviously, when moving fast, speaker clarity, upselling,
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would you like larger fries with that and also customer service? in the many time, move on to earnings season, earnings season for the big restaurant kicks off today after the bell when yum brands comes out with the results. we want to know if america is still getting their grub on or have those higher gas prices jane wells has been tell willing us about in california kept us at home eating boxed mac and cheese. i say what is wrong with boxed mac and cheese. what say you, jane? >> talk about putting a break on spending. mr. lincoln wants to know use know buy a gallon of gas or buy lunch? for every 1% rise in gas prices nationally it affect consumer spending by $1.4 billion according to buckingham research. and here in came, which represents about 12% of the population, we have seen 12% hike in gas prices in just a week. they are not seeing an impact at restaurants yet but when it comes it will hit the lower-cost
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segment first where customers are more price conscious. watch for changes in ihop owned by dine equity. bob evans and denny's. now, tech nomic out with numbers for lower and upper middle consumers, lower and upper, price is now the most important factor in choosing fast food, or what they call limited service restaurants for a dine-in occasion. i call it takeout. however, 71% of middle-income consumers use restaurants for socializing and tech nomics says savvy operate letters create a fun gathering place for those upper/middle income spender. as retail gas prices in california hit, yet a new record today, yes, still going up, buckingham says restaurant prices are now rising faster than grocery store price. the relative value of eating out is shrinking, just as capacity is again rising. not to mention what an obama re-election could mean to the industry's health care costs. mandy? >> you know, it's an interesting one. i thought those gas prices were
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supposed to be coming down. last time, last week, indications of it coming down. >> the wholesale prices, i know. no, they are not. they are not. >> listen, jane, jane -- >> today maybe the peak. >> i hate to be the one that says it, if gas food keeps going up, gas will keep going up. figure that one out. >> all right. so. >> sorry. >> riddle of the day. >> infantile of me. jane. thank you. let's stay on food. because even though many dining stocks have done well, some restaurants put the others to shame. we are talking stocks. so, what is the single best restaurant stock in our next guest investing world? steven anderson, senior analyst at miller tabak. steven, who is your top pick? >> my top pick right now is domino's pizza, dpz. as you may well new york the company launched its new pan pizza about two weeks ago.
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it's performing really well, the first two weeks since its launch and had its national media debut last sunday. and we think there's a high incidence of reorders for the new pan pizza, most important product launch for dominos in the last three years, we argue, this is the kind of thing that drives traffic in the fast food segment. >> that's really big statement, right, to say that the pan pizza is the most important new product introduction in the last three years? feels like it is going to be a hard one to beat. i believe quo even see a large size. it only comes in medium right now. >> that is correct. only comes in a medium for $7.99, which is not a bad price but we do think that if successful, this will be extended to a larger size and accommodate bigger parties and be a great thing to have for the super bowl, don't you agree? >> what else does it have to fall back on? a bold call on a stock, i imagine i want other fundamen l fundamentals other than a pan
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pizza? >> domino's has half locations overseas, fast-growing markets, pulling double-digit same-restaurant sales and continues to grow in that country, this has over 10,000 u.s. and still growing. you may assume that's mature story in the u.s. and indeed it is. but international is the other leg of this story. >> steven if domino's is so great, why is papa johns up 34% year-to-date and dom niece 12%? >> seen with papa john's, a certain extent pizza hut, yum answers transto the segment, they have really emphasized more the value end. gotten more aggressive on promotion activity. domino's, which had in the last couple of years been very active on new introductions, got a little bit less active in recent quarters but this is kind of the thing that will drive not only same restaurant sales but increase the average number of orders. >> twice in the last week, i have tried go to a cheesecake
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factory, the wait 90 minutes or more both time, given up, walked out, how great is that company? >> it's performing very well and say the last three years that really performed well, not just from the top-line perspective but also taken a lot of costs out of the system. what's more, seeing some less competition in that upscale casual segment. some of the chains it competes with, california pizza kitchen, mccormick and schmidt, giving them a run. >> last time i went, i couldn't get in either. adding another anecdotal voice to the picture. thanks for joining us. >> thanks for having me own. >> our own jim cramer is talking food tonight on "mad money." the ceo of conagra foods, meal sides, snacks, dessert he is, all on "mad money" tonight. i hope your mouth is also watering, 6 and 11 eastern the
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time you have to wait for around pacific. developments in the middle east pushing oil sharply higher today. let's get more now with sharon epperson at the nymex. >> a lot of traders are following what has been happening between syria and turkey and the escalating tensions there, concerns about the pipeline from irtrack to turkey and potential disruption of transport there, helped to drive up price and then saw prices move even higher after announcement that we would see fromsome prime minister netanyahu about early elections and that came to fore as well a lot of volume in today's rated in oil market and oil prices here, the wti contract, at the highest levels we have seen in a week's time. brent crude moving higher. the three-week high, and even getting some extra volume in natural gas, reversing a trend that we saw there natural gas up 2% on the day. so, overall energy all higher on the session. back to you. >> certainly looks like t thanks very much, sharon. two leading analysts with two very different calls on
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netflix over the past two days. what are investors to make of that? also ashaerksd face booked next myspace in the very outspoken michael wolf here to tell us why he thinks so and what, of course, it means for facebook investors. i'm bara ck o bama, and i approve this message. "i'm not in favor of a $5 trillion tax cut. that's not my plan." mitchell: "the nonpartisan tax policy center concluded that mitt romney's tax plan would cost $4.8 trillion over 10 years." vo: why won't romney level with us about his tax plan, which gives the wealthy huge new tax breaks?
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because according to experts, he'd have to raise taxes on the middle class - or increase the deficit to pay for it. if we can't trust him here... how could we ever trust him here? ♪ ♪ ♪ [ male announcer ] introducing a look twice. introducing a stunning work of technology -- the entirely new lexus es. and the first-ever es hybrid. this is the pursuit of perfection.
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we have got lots of sunshine today for a stock off nearly 70% year-to-date. talking about spectrum brands, very fitting name for sunshine. shares of the consumer products company soaring about 12%, in a deal to buy the hardware and home improvement group of stanley black & decker. the price tag? $1.4 billion in cash. netflix had a rather amazing month, up about 18%. but it is our disaster du jour, which is redundant, a day after getting an upgrade, bank of america merrill lynch downgrades with as 72 target price a company called consumer edge commenting saying membership lovers -- membership numbers may have peaked in q 2, grandpa, competition ramps up, particularly from all this coming one day after an
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upgrade from morgan stanley. so, as a point, a piece i put out on today says, why would you own this stock or maybe any stock when analysts can't make up their minds? as usual, herb running over, arms flailing, screaming at me, disagreeing. tell me why i'm wrong. >> well, look, i think that is also what the market's all b we have talked about this over and over. what i like to say is how many times we get two smart guys, same set of numbers, two very different opinions. that's what's great about the markets. what you embrace about the markets what a smart investor would look at and say, hmm this guy says this. >> i agree with that. i agree with you completely, okay. what troubles me about netflix, in particular, was you have got giant behemoth in amazon that may or may not be putting netflix out of business essentially. >> no. no. >> this is not a minor ea adjustment on ebidta estimates i and multiples. this is whether or not a company
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is going to destroy another company or not. >> not just amazon. so much more than amazon. pulling at amazon but so much competition in the space that is just one part of the story and i think you have to look at this, tough start saying how how has this analyst been, how's that analyst been? >> i kind of agree. to be fair, i mean, in your piece on, you actually make this point. this is what makes a market. you don't want all the duction li -- ducks lining up on one side. by having two points of view, you're sparking conversation. >> it just troubles me they're so far apart. they're looking at the same stuff, same competitive landscape, and they're way over here. >> if you own the stock. >> why would i own it? >> you want to look at the guy, look at the other guy's opinion. figure out, does he had having
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that makes you want to rethink your investment in the company? >> all i'm saying is if i'm thinking about buying netflix or i own it and i have a respected analyst saying amazon is not a threat and a respected analyst saying amazon is not a threat, i'm nervous. >> you need a third analyst to adjudicate. okay. thank you, herb. facebook may be running out of friends. it was downgraded just yesterday, and some say it's become blah, boring, the same old people posting in day in, day out. a "usa today" column penned by michael wolf, who joins us now. i really liked one way of putting this. that facebook is like the interstate highway experience. and then, coming along are all the other wonderful little roads you can go off to for your own special and unique experience.
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they're starting to crowd out the interstate highway. michael? >> well, thank you very much. you know, facebook is in this intractable position that grows worse. we know that advertisers don't like it very much. that's been a huge hit. i mean, a 50% hit on its initial share price. but there's another problem here. it's an endemic media problem. it's called fragmentation. it happens almost in every aspect of media, which is the general goes to the specific. you build in a large audience and someone else comes along and offers you a better experience. now, facebook's response to that has always been critical mass. we have a billion people. nobody can come along and do this like we've done it. but actually, you can.
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what facebook does is provide you the wherewithal to build much smaller, much more specific, much more targeted social networks. everyone has access to their friends on facebook. therefore, you build a new social network, you send to your friends, and you have a natural, easy, and cheap way to fragment -- >> is it the yogi berra problem? nobody goes there anymore, it's too crowded. >> that's certainly one of the things. you can look at facebook and say it's, you know, boring, it's square. >> i think it's premature to say that facebook is sort of going to be a dinosaur or anything like that. i know that's not exactly what you're saying, and i agree with you, the advertising issue is significant. i look at some of these, like a twitter, for example. i see what they're doing -- in fact, one of the more important stories of twitter right now is
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twitter is a great feed, but when it comes to financial news and stocks, stock twits has really carved something out and twitter is going to try to take that back. i don't thinktter take that back, which gets to the fragmentation you're talking about. >> exactly. let's remember these are all advertising plays. where do you make money on advertising? you make it by targeted. you make it by offering an audience that's more valuable than a broad-based undifferentiated, not very inspiring audience. >> i want to ask you, michael -- i mean, is it that we, as online communities, we're getting bored too quickly? facebook was cool once. maybe even still is cool, but it's very quickly no longer going to be the cool kid on the block. but our attention spans in terms of what's cool is getting shorter and shorter. >> i don't think it's our
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problem. i think it's the problem of whoever is trying to hold our attention. that's their job. and there's just a fundamental contradiction built in here. if your model is to grow as big as you possibly can, that's dilutive. you're going to find yourself offering something that is not customized in a customized world for most of the people, most of your users. >> michael, thank you very much for weighing in. herb, we kind of threw this out there in the introduction. you know, myspace used to be the cool thing. then a number of other things, then facebook. is myspace making a comeback? >> i can't imagine it's making a quote, unquote comeback, even though some celebs have gone to it. i think it's about the fragmentation of this market. i think you're going to continue to evolve and who knows what will be there next. i got it tell you, facebook, twitter ain't going away any time soon. >> and it's not going away also.
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>> speaking of celebrities, "esquire" magazine has named the sexiest woman alive. brian had no idea who she was. mila kunis was in "that '70s show." she's the voice of meg griffin in "family guy." she was also in "the black swan," and she's dating ashton kutcher, perhaps one of her biggest coos to date. away from all of that, the red carpet, beautiful bling and dresses, let's get a market flash from jackie deangelis. >> we're taking a second look at verifone. rebounding off of session lows. we looked at the stock earlier on a report that square is planning to disclose a partnership with new york city to implement its payment systems in city cabs. that put the stock down earlier. again, that's going up as those reports are denied. back over to you. >> pick move there. all right, jackie. i'm sure herb will get more on that later. we got to go. all right. size matters, especially when it comes to your fridge and your
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waistline. we'll explain next. ♪
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